BUCHAREST — Hungary’s forint weakened more
than 1% on Monday and central European stocks flirted with new
lows as fears rose over the harsh economic impact of Russia’s
halt to gas supplies through its main pipeline to Europe.
Data showed further signs of economic slowdown in central
Europe as inflation singes consumption and energy prices soar.
Czech real wages declined at the sharpest pace in decades in the
second quarter while Hungarian retail sales growth eased in
July, according to releases.
The poor economic view added to market nerves as focus was
sharply on news that Russia said gas supply via its main
pipeline to Europe would stay shut, sending gas prices surging.
The forint, which has touched new historic lows in recent
months and has taken the brunt of risk selling in central
Europe, had fallen 1.2% by 1020 GMT, to trade at 404.6000 to the
euro, its weakest since end-August. It hit an all-time low of
416.89 in July, although interest rate hikes have helped steady
it at times.
“CEE economies are showing signs of slowing and the
geopolitical story has not changed,” ING Bank said. “Thus, it is
hard to look for additional support from central banks and
interest rates for FX.”
The forint has lost 8.6% against the euro this year. Last
week, Hungary’s central bank took its key interest rate to
11.75% and announced new measures to tighten forint liquidity.
“As long as this (pressure on energy prices) persists, and
it is not expected to abate anytime soon, the forint will not be
able to firm meaningfully,” a trader said.
Elsewhere, the Czech crown and the Romanian leu
were down 0.2% and 0.1%, respectively. The Czech
central bank has maintained a mandate to intervene in markets to
prevent excessive currency fluctuations.
The Polish zloty was down 0.7% at 4.7380 per euro
ahead of a central bank rate-setting meeting on Wednesday.
Analysts have estimated a quarter-point interest rate hike, but
high inflation might boost expectations.
“If the MPC does not decide to make a decisive move on rates
(50 basis points) or tighten the rhetoric, the risk of zloty
weakening increases,” Alior Bank said.
The sharp market moves come as European Union energy
ministers meet at the end of the week to seek ways to cool
energy markets, with electricity bills rising fast around
Europe, hitting consumers and economies.
Stock markets around the region fell on Monday, with
Prague’s index down 1.2% on the day at its lowest level
since May 2021. Budapest was also 1.2% lower at a
seven-week low, and Warsaw’s fell 0.7%.
In Bucharest, the blue-chip index bucked the trend,
up 0.9% on the day as markets were digesting the impact of a new
government support scheme for energy bills.
CEE SNAPSHO AT
MARKETS T 1157
Latest Previou Daily Change
bid close change in 2022
Note: calculated from 1800
Latest Previou Daily Change
close change in 2022
Prague 1137.15 1150.11 -1.13% #VALUE!
Budapest 41329.9 41941.2 -1.46% -18.51%
Warsaw 1503.19 1505.75 -0.17% -33.69%
Buchares 11937.3 11838.4 +0.84% -8.61%
t 9 1
Ljubljan <.sbitop a>
Zagreb 1987.99 1992.68 -0.24% -4.39%
Sofia 609.81 611.09 -0.21% -4.07%
Yield Yield Spread Daily
(bid) change vs Bund change
3×6 6×9 9×12 3M
Czech 7.41 7.44 7.12 7.26
Hungary 14.81 15.10 14.80 12.81
Poland 7.77 7.88 7.72 7.15
Note: are for ask
(Reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague,
Gergely Szakacs in Budapest and Pawel Florkiewicz in Warsaw;
Editing by Emelia Sithole-Matarise)